Cultural diversity may lead to reduced communication and to reinforcement of
existing stereotypes. For transnationalWrms, problems such as the lack of literacy
skills in the local workforce of a developing country, or an expatriate’s lack of local
language skills, may act to restrict the opportunity for eVective communication.
Whatever the reason, poor communication may lead minority group members to
feel a lack of empathy with organizational or managerial goals, and this in turn may
limit their willingness to participate in workplace processes.
At an organizational level, manyWrms have responded to globalization and
increased their diversity by using oVshoring or outsourcing strategies. The move-
ment of jobs to locations with comparatively cheap labor, such as the ‘oVshoring’ of
jobs in the information technology industry to India and China, has led to
substantial debate. While this movement is argued to increase shareholder wealth,
there has been considerable concern raised over negative outcomes such as related
job losses in countries such as the USA and Australia (Jones 2005 ).
- 2 The ‘Value-In-Diversity’ View
In contrast, the ‘value-in-diversity’ approach assumes that diversity in work groups
will enhance eVectiveness (Cox 1993 ; Miroshnik 2002 ). This research stream devel-
oped in part as a response to the recognition that workforce diversity was increas-
ing, and managers needed to develop ways to eVectively manage the diVerent views
and characteristics of the new, diverse workforce (see this Handbook, Ch. 13 ). This
research stream is focused to some extent on adding value by enhancing organiza-
tional eVectiveness and performance. This perspective suggests that culturally
diverse groups, such as multicultural project teams in transnationalWrms, will
generate diVerent opinions, engage in more thorough critical analysis, and thus
make better-quality decisions (Shaw and Barrett-Power 1998 ).
Cox ( 2001 ) identiWedWve ways in which diversity could add value to an organ-
ization: improved problem-solving; increased creativity and innovation; increased
organizationalXexibility; improved skill variety in the workforce; and improved
marketing (e.g. increased customer base). For example, a diverse workforce is
proposed to help organizations to understand the diVerent needs and values of
the cultural groups that comprise their client base (Friday and Friday 2003 ;
Wentling 2000 ).
On the other hand, there are recognized costs associated with managing diversity
poorly. When organizations do not manage diversity well, there is increased likeli-
hood of turnover and absenteeism among minority groups. In addition, organiza-
tions that do not manage diversity well may be in breach of legislation and may
incur associated costs. There are also indirect costs, such as the loss of organiza-
tional reputation and inability to attract high-quality employees to the organization.
While there has been considerable research exploring the ‘value-in-diversity’
approach, many questions remain unanswered. For example, the evaluation of
diversity programs remains an area for attention. While many transnationalWrms
transnational firms and cultural diversity 515